Russia’s central bank hiked its main interest rate by 3.5 percentage points to 12% Tuesday after the ruble hit a 17-month low the previous day.
“Steady growth in domestic demand surpassing the capacity to expand output amplifies the underlying inflationary pressure and has [an] impact on the ruble’s exchange rate dynamics,” the central bank said in a statement released by its press service.
So far this year, the ruble has shed 35% of its value, as Moscow’s war in Ukraine takes a heavy toll — though President Vladimir Putin has insisted that Western sanctions are having a limited effect.
Speaking to CNN’s Erin Burnett late Monday, US Treasury Secretary Janet Yellen said the ruble’s decline reflected the fact that sanctions, as well as the war, were “causing a drain on the Russian economy.”
Analysts were skeptical Tuesday’s emergency action by the Russian central bank would provide a lasting solution to the currency’s problems.
The ruble’s depreciation is a consequence of many factors moving against Russia all at once,” Liam Peach, senior emerging markets economist at Capital Economics, wrote in a note.
This is the best summary I could come up with:
Russia’s central bank hiked its main interest rate by 3.5 percentage points to 12% Tuesday after the ruble hit a 17-month low the previous day.
“Steady growth in domestic demand surpassing the capacity to expand output amplifies the underlying inflationary pressure and has [an] impact on the ruble’s exchange rate dynamics,” the central bank said in a statement released by its press service.
So far this year, the ruble has shed 35% of its value, as Moscow’s war in Ukraine takes a heavy toll — though President Vladimir Putin has insisted that Western sanctions are having a limited effect.
Speaking to CNN’s Erin Burnett late Monday, US Treasury Secretary Janet Yellen said the ruble’s decline reflected the fact that sanctions, as well as the war, were “causing a drain on the Russian economy.”
Analysts were skeptical Tuesday’s emergency action by the Russian central bank would provide a lasting solution to the currency’s problems.
The ruble’s depreciation is a consequence of many factors moving against Russia all at once,” Liam Peach, senior emerging markets economist at Capital Economics, wrote in a note.
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